updated 6/9/2005 2:30:00 PM ET 2005-06-09T18:30:00

Former Bank of America broker Theodore C. Sihpol III was found not guilty Thursday of 29 counts, including a top count of grand larceny, at a trial related to after-hours mutual funds trading.

State Supreme Court Justice James Yates declared a mistrial on four deadlocked counts: first-degree scheme to defraud, violation of the state's general business law (the Martin Act), and two first-degree counts of falsifying business records.

The judge read into the record a note that said one juror "has resisted all our appeals to reason and evidence," had "withdrawn from deliberations" and had refused to discuss the case further.

The state attorney general had claimed that Sihpol helped Canary Capital Partners profit by the illegal late trading of mutual fund shares. Canary is a hedge fund that invests and manages the money of the Stern family, former owners of the Hartz Mountain Industries pet products company.

Sihpol, 37, was the first defendant tried as a result of the state attorney general's probe of the securities industry.

One of Sihpol's lawyers, Evan Stewart, had argued that no law made it a crime to trade mutual funds after 4 p.m. In his final instructions to jurors, Yates had said federal trading rules were not before them for consideration. Rather, they were to decide whether Sihpol was guilty of the charges against him.

"We're very pleased that at least the jury reached the right result on 29 counts. We believed in Ted's innocence," Stewart said outside the courtroom. He said Sihpol still faces civil litigation filed by the federal Securities and Exchange Commission and other parties.

"Ted will be busy regaining his reputation and getting on with his life. He's been through a terrible ordeal for two years," said Stewart. "He was prosecuted for conduct for which no one had ever been prosecuted before."

Stewart said it is up to the attorney general to decide whether to retry the four counts on which the jury deadlocked. That will likely be discussed on June 23 when the parties return to court, he said.

Sihpol was indicted in April 2004 on charges of scheme to defraud, first-degree grand larceny, violations of the state's business law (specifically securities fraud) and falsifying business records.

The indictment accused Sihpol of stealing more than $1 million from each of six mutual funds in $2.3 billion worth of trades. The funds were the Nations Funds Trust, which is associated with Bank of America; PIMCO Funds; MFS Family of Funds; Janus Investment Fund; Fred Alger Fund, and RS Investment Trust.

Yates told jurors they had to find that Sihpol committed acts which "intentionally aided" others to commit the crimes with which he was charged.

On Tuesday, the judge had rejected a partial verdict and told the jurors to continue deliberations.

Sihpol remained free on $750,000 bail during the trial.

Stewart says his client is broke. He said Sihpol, who has a 3-year-old son, had to sell his house in Connecticut, and his wife, Rhonda, had to return to work as a sales supervisor at Salomon Smith Barney because of the family's financial problems.

Stewart told the jury at the start of the trial that Canary's principal, Edward Stern, earned $100 million through late trading but paid $40 million to settle the attorney general's case against him and kept $60 million.

Stern's father, Leonard N. Stern, is the chairman of Hartz Mountain Industries and is estimated by Forbes magazine to be worth more than $2 billion.

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